Comment: The Advocate General’s opinion on the Singapore FTA is a pyrrhic victory for Europe’s trade-sceptics

If the Court of Justice rules on the lines offered by the European Court of Justice’s Advocate-General’s opinion released on 21 December 2016, the EU will not be able to sign modern trade agreements that include namely social and environmental standards, writes Christofer Fjellner.

Last October’s debacle during which Wallonia held Europe hostage by blocking the signature of the free trade agreement with Canada, CETA, exposed terrible weakness in European trade policy. That Wallonia was able to block the signature of CETA was due to one fact, the Commission had proposed it as a mixed agreement that has to be signed and ratified not only by the EU but by all member states.

Now, a preliminary opinion from the European Court of Justice holds that a similar agreement with Singapore is a mixed agreement that needs to be approved by 38 national and regional parliaments. If the opinion is upheld in the final ruling, it will have significant consequences for EU trade policy. An upheld opinion will also prove to be a pyrrhic victory for the European anti-trade left as future trade agreements may not contain the provisions on sustainable development modern agreements have.

The basic idea of the European Union is – and has always been – to pool sovereignty of the member states. Trade policy has in essence been an area where the member states have pooled their sovereignty ever since the Treaty of Rome in 1957.

We are a stronger negotiating partner together and the shared common commercial policy has spurred growth in Europe for a long time. But trade agreements look much different today than they did before and cover many more areas than simply tariffs and quotas, including rules on investments, services, procurement, labour protection and transports to name a few. The big question is whether the EU can credibly negotiate these agreements as well. The preliminary opinion today delivers a blow to that ability.

In our trade negotiations we have been pushing for other parties to liberalise their markets in, among others, the transport and procurement sectors. If the EU cannot negotiate as one party in these areas, we will have a harder time to ensure access to new markets abroad.

The debacle around CETA shows that the EU has a hard time passing a mixed agreement in all member states’ parliaments and our leverage in ongoing negotiations with important partners such as the US and Japan will decrease if the other parties don’t expect us to ratify a signed agreement.

But the opinion must be considered to be a blow to the European left as well. They demand that current free-trade agreements cover provisions on labour and environmental standards, areas that the opinion also says is covered by member states competence. At the same time, the opinion says that investments and the dispute resolution for investment disputes are covered as an EU-only competence, a bitter message for those who say dispute resolution would violate the EU treaties.

Member state rethink required

If the opinion becomes the final ruling of the Court of Justice, the EU heads of state and government must reconsider EU trade policy.

Either they have to decide that EU should start negotiating less ambitious agreements where areas such as transports and labour and environmental standards are excluded and negotiate separately or they have to decide to pool competencies on those matters as well. Otherwise, we will be stuck having deals mostly covering tariffs, rules and investments. Those deals might not be any easier to swallow for the European left, as the provisions that deal with sustainable development would have to be left out.

European trade policy is at a crossroads. The problem for the EU to sign CETA has cast doubts on our ability to negotiate ambitious trade agreements and has already had consequences for our ongoing negotiations. In the plurilateral negotiations for a services agreement, TiSA, other parties have tried to kick the EU out of negotiations due to our inability to even make an offer on e-commerce.

We were not able to secure a green goods agreement with 17 other WTO members, partly because of EU protectionism on bicycles. I guess that many trade sceptics on the left may be celebrating the opinion but any celebration can soon backfire – the main consequence may be new agreements without the guarantees on social and environmental protection they ask.

The rest of the world has moved on with ambitious deals covering more than market access. If Europe does not find a solution, we will be left behind and unable to take the lead in shaping globalisation as somebody else will.

Credit: P Knutson

Christofer Fjellner is a Swedish MEP (EPP) and a regular columnist at Borderlex